10 years of R&D spending analysis of 12 key PV module manufacturers

R&D spending patterns

Combined R&D expenditures of 12 major PV module manufacturers in 2016, tracked since 2007, declined by approximately 4.4% in 2016 to US$519.3 million (see Chart1), compared to US$542.9 million in 2015. As 2015 expenditures were a new record high, 2016 becomes the second highest year of spending and 2014 the third highest. All three years highlight total combined annual R&D expenditures above US$500 million.

Combined R&D expenditures of 12 major PV module manufacturers in 2016.Combined R&D expenditures of 12 major PV module manufacturers in 2016.

Interestingly, two expenditure peaks, both above the US$500 million mark have occurred in the last 10 years with 2011 standing out at US$510 million, being the first time the US$500 million mark was exceeded and five years later in 2015, when second peak occurred.

There were four manufacturers that reduced R&D spending in 2016 (see Chart 2), these included First Solar, Yingli Green, Renesola and REC Group. All four had also reduced R&D spending in 2015 from 2014 levels. R&D spending had bottomed in 2012, when the PV industry was going through its worst period of overcapacity, yet that year saw six companies reduced spending, many for the first time.R&D spending levels of 12 major PV module manufacturers in 2016.

R&D spending levels of 12 major PV module manufacturers in 2016.

Notable in the expenditure decline year-on-year were Yingli Green, Renesola and First Solar, which reduced spending by 65.4%, 37% and 4.4%, respectively.

The overall increase in spending in 2014 and 2015 had led to more companies spending above the US$20 million mark annually, which left only two companies (Canadian Solar and REC Group) below that level. With REC Group estimated to have reduced spending slightly in 2016 and Canadian Solar making a marginal increase but below the US$20 million mark, no changes at this low level occurred in 2016.

Trina Solar was estimated to have moved into the above US$40 million to US$60 million range in 2016, which was populated by Renesola and Hanwha Q CELLS in 2015. However, with Renesola significantly reducing expenditures, only Trina Solar and Hanwha Q CELLS populated the US$40 million to US$60 million range in 2016.

The US$20 million to US$40 million range is now the most populated with six companies (SolarWorld, Renesola, JinkoSolar, Suntech, Yingli Green and JA Solar). More accurately, these six manufacturers are clustered tightly together with the lowest spender in this bracket being Yingli Green with US$21.2 million spent on R&D activities in 2016 and the highest, SolarWorld spending US$27.9 million in 2016 and before its bankruptcy and subsequent rebirth.

In relation to the two manufacturers (First Solar and SunPower) in the top echelons of R&D expenditure the gap between the two firms has closed significantly for the first time. With First Solar reducing spending for two years in a row and SunPower increasing spending three years in a row, resulting in the two companies being separated by only US$8.6 million, compared to US$31.6 million in 2015 and US$70.6 million in 2014.

Both First Solar and SunPower spent over US$100 million each on R&D activities in 2016, which was the first time for SunPower (US$116.1 million) and the sixth time (consecutively) for First Solar (US$124.7 million).

On a year-on-year R&D expenditure increase basis, Trina Solar was estimated to have increased spending by around 24%, while Suntech and JinkoSolar reported the same 17.5% increase and SunPower a 17.3% increase. Other manufacturers (Hanwha Q CELLS, Canadian Solar, JA Solar and SolarWorld) increased spending in the single-digit percentage range.

R&D staffing patterns

A key difference in 2016 to previous years covered by this report was the higher decline (9.5%) in the number of employees designated to R&D activities than when R&D expenditure also declined but at a lower (4.4%) rate.

Combined R&D Headcounts in 2016.Combined R&D Headcounts in 2016.

After a major decline in the number of employees designated to R&D activities in 2013, staffing levels have rebounded strongly. Having reached an initial headcount peak in 2011 of 3,575, numbers declined to a low of 2,911 in 2013. With higher spending came increasing staffing as well as the previously highlighted, re-designation of R&D personnel at Yingli Green in 2010 and Trina Solar in 2014, which significantly weighted overall staffing levels higher.

A total of eight manufacturers in 2015 added R&D headcount. However a total of nine manufacturers (including estimated) reduced R&D headcount in 2016 (See Chart 4) These included manufacturers (Trina Solar, JA Solar, SunPower and Hanhwa Q CELLS) that actually increased R&D spending in 2016.

Key 12 PV Module Manufacturers R&D Headcount by Company in 2016.Key 12 PV Module Manufacturers R&D Headcount by Company in 2016.

The four manufacturers (First Solar, Yingli Green, Renesola and REC Group) that reduced R&D spending in 2016 also reduced R&D headcount in 2016. It should be noted that both First Solar and REC Group headcount are estimated and the reductions negligible.

The standout reductions in R&D headcount come from ReneSola (162), Yingli Green (103) Trina Solar (188 estimated), Hanwha Q CELLS (78) and SunPower (43).

The R&D headcount reductions in 2016 from the four highlighted manufacturers are generally due to restructuring, cost reductions and business transitions. In the example of Yingli Green, a major restructuring has been underway, resulting in a massive 3,908 headcount reduction by the end of 2016. A company in transition away from manufacturing, ReneSola also reduced its overall employee headcount by 524 in 2016. On-going cost reduction strategies at Hanwha Q CELLS led to 1,901 job losses in total in 2016.

In contrast, SunPower actually increased its overall headcount in 2016 by 1,714. However, SunPower has since closed facilities and is undergoing a major restructuring effort.

The total number of employees designated to R&D activities from the 12 PV module manufacturers tracked was 5,002 in 2016, down from 5,533 in 2015, a decline of 531 or 9.5%.

R&D spending rankings in 2016

Once again there were certain changes to the spending rankings (See Chart 5) as cuts impacted the middle cluster of manufacturers, while the gap at the top may have closed sharply, there were no changes to the rankings for the first and second positions in 2016.

Key 12 PV Module Manufacturers R&D Spending (US$ Millions) Ranking in 2016.Key 12 PV Module Manufacturers R&D Spending (US$ Millions) Ranking in 2016.

First Solar

First Solar once again has been ranked first in annual R&D spending, making it the eighth consecutive (2009 – 2016) year for the CdTe thin-film module manufacturing leader, despite a second year of expenditure reductions and confirms the view highlighted in the 2015 report that R&D spending would seem to have peaked in 2014.

The decrease in R&D expenditure was partially due to a lower R&D headcount but also the cycle in developing its large-area Series 6 modules, with emphasis shifting to capital expenditures to completely migrate all manufacturing (including new build) to its next-generation CdTe modules. Less emphasis is also being attached to PV systems development, such as trackers, preferring to collaborate with leading third party suppliers, especially with the Series 6 module transition.

The company is continuing to operate its ‘vertical integration’ R&D model from advanced research to product development through to manufacturing roll-out, which includes continue module conversion efficiency improvements, despite the large-area module format change.

First Solar held two world records for CdTe PV efficiency, achieving an independently certified research cell efficiency of 22.1% and a full-area module efficiency of 18.2%.

SunPower Corp

SunPower was ranked second in 2016, the second consecutive year for the company that has the highest efficiency solar cells and modules that deploy IBC (Interdigitated Back Contact) cell technology.

In fairness to SunPower, apart from one year (2014) when Yingli Green spent more on R&D than SunPower, it had easily been the second highest spender since 2010.
The boost in spending in 2016 does not correlate to increase R&D staffing levels, instead its surrounds its P-Series module and new PV systems development and roll-out for residential, commercial and utility-scale downstream markets.

The increase can also be attributed to establishing a new R&D facility at its headquarters in San Jose, California. Only recently has SunPower Corp said that it had invested around US$25 million in the last 12-months on the facility, which includes several high-volume production-sized manufacturing tools and automation, and specialized testing equipment, designed to support its next-generation of high-efficiency N-type monocrystalline IBC solar cells and modules, which are being designed with greater emphasis on lower cost manufacturing. The new facility was said to be housing around 100 engineers and support staff.

SunPower noted that the new R&D facilities pilot line, which had already produced the first next-gen module to replace its X Series (25% conversion efficiency) solar cells (22% conversion efficiency) modules.

Hanwha Q CELLS

Despite an R&D headcount reduction, Hanwha Q CELLS moved up the rankings in 2016, due to spending almost US$50 million and Yingli Green’s continued drastic spending cuts due to major restructuring of the company. The company was ranked third in the spending rankings in 2016, up from fourth in 2015.

R&D focus continued to be centred on P-type multicrystalline PERC and mono-PERC cell efficiency gains and production cost reduction initiatives such as migrating all capacity to the larger (156.75mm by 156.75mm) wafer size.

Average P-type multi PERC cell conversion efficiencies have reached 20% and 22% for P-type mono PERC cells. Other R&D efforts have continued on LID and PID process limitation.

Trina Solar

Increased R&D spending in 2016 helped Trina Solar jump from being ranked sixth in 2015 to being ranked fourth in 2014. The company also benefited from the spending cuts by Yingli Green and ReneSola to move up two ranking positions.

Trina Solar had increased R&D spending in the first half of 2016, compared to the prior year period. However, due to delisting from the NYSE the company was not obliged to provide further quarterly reports or a 2016 annual report.

This meant that full-year 2016 R&D spending figures and R&D headcount numbers was estimated based on the first half year publically reported details.

Recently, Trina Solar reported that R&D efforts with N-type monocrystalline IBC solar cells had led to a conversion efficiency of 24.13%, which was verified by the Japan Electrical Safety & Environment Technology Laboratories (JET). This was produced on 156×156 mm solar cells with a low-cost industrial IBC process, featuring conventional tube doping technologies and fully screen-printed metallization. In December 2014, Trina Solar announced a 22.94% total-area efficiency for an industrial version, large size (156x 156mm2, 6″ substrate), IBC solar cell.

The company has also been developing PERC and bifacial cells in recent years and reported in 2016 that it had achieved a new world conversion efficiency record of 22.61% for a high-efficiency P-type monocrystalline PERC solar cell, independently confirmed by the Fraunhofer ISE CalLab in Germany.

SolarWorld AG

SolarWorld AG increased R&D spending to US$27.9 million in 2016, up from US$25.9 million in the previous year. Also benefiting from spending cuts at Yingli Green and ReneSola, the company was ranked seventh in 2015 but moved up two positions to fifth in 2016.

The company has focused resources on high-efficiency P-type multicrystalline and monocrystalline PERC solar cell development in recent years including bifacial cells. However, the company realigned to focus on mono-PERC and bifacial technology.

The company had achieved average efficiencies of over 22.0% with PERC cells manufactured on its high-throughput pilot line with 5BB and M2 large area 156mm x 156mm wafers. SolarWorld was working on conversion efficiencies above 24.0% that retained screen-printing PERC and other process improvements.

However, in May 2017 the company entered insolvency proceedings but its German manufacturing and R&D operations were acquired by former founder and chairman of SolarWorld AG, Dr. Ing. Eh Frank Asbeck, which included manufacturing and R&D operations under the subsidiaries SolarWorld Industries Sachsen GmbH, SolarWorld Innovations GmbH as well as SolarWorld Industries Thüringen GmbH.

The new company, SolarWorld Industries plans to continue to focus on mono PERC and bifacial cell R&D and production in partnership with Qatar Solar Technologies, its new 49% shareholder.

ReneSola

With ReneSola cutting both R&D expenditure and headcount in 2016, it was relegated to fifth from fourth in the rankings, spending US$27.3 million that was primarily attributed to continued development of technologies to manufacture high-conversion efficiency solar cells with improved performance.

The company was able to achieve conversion efficiency rates of 21.1% for P-type monocrystalline cells and 18.6% for P-type multicrystalline cells manufactured using its in-house developed solar wafers.

However, ReneSola is transitioning its business to become a downstream PV project developer and in 2017 has announced a potential sale of its manufacturing and therefore main R&D operations.

JinkoSolar

Having been a perennial low spender, JinkoSolar was ranked seventh in 2016, up two ranking positions from ninth in 2015 after spending US$26.1 million on R&D, compared to US$22.2 million in the previous year.

The company outstripped spending by JA Solar in 2016 and was supported by the spending cuts forced upon Yingli Green as it restructured its operations.

JinkoSolar begun research on its “Eagle+” solar modules, which are expected to have multicrystalline cells that reached conversion efficiencies of approximately 20.4% in lab tests by a third party in 2016. The company has also achieved a record P-Type multicrystalline cell efficiency of 21.63% in 2016.

The company also made a decision to increase P-type mono PERC R&D including migrating to diamond wire and ‘black silicon’ texturing.

Wuxi Suntech

Wuxi Suntech now the PV module manufacturing arm of Shunfeng International Clean Energy (SFCE) increased R&D spending to US$25.7 million in 2016, up from US$20.2 million in 2015 after full integration into SFCE.

R&D activities have focused on continued efficiency improvements for PERC cell technology. The company has achieved average cell efficiency of over 21%, and champion cell efficiency of 21.3% in production.

The company continues to collaborate on a hydrogenation process with the UNSW and confirmed the development and testing with Taiwan Carbon Nanotube Technology Corporation (TCNT) of a high-strength, lightweight carbon and glass fiber composite PV module frame, the first such development of its kind in the PV industry.

JA Solar

Although JA Solar increased R&D spending in 2016 to US$25.5 million, up from US$23 million in 2015 it was ranked ninth, compared to eighth in 2015.

Importantly, JA Solar is the only manufacturer in the group study that has increased R&D spending consecutively for the last 10 years, a remarkable feat, considering the dynamics of the PV industry.

The company has continued to develop high-efficiency multi and mono technologies having introduced its monocrystalline PERCIUM series utilizing PERC technology with an average conversion efficiency of over 21.0%, and its multicrystalline RIECIUM series utilizing RIE (Reactive Ion Etching) texturing to enable the use of diamond wire technology on multicrystalline wafer and has conversion efficiencies of over 19.2%.

A key focus of development has been bifacial PERC-based cell and module development in 2016, which led to new product introductions in early 2017.

Yingli Green

Major financial issues have forced Yingli Green to drastically cut costs across its entire operations in the last two years. With R&D spending cuts, Yingli Green was ranked tenth in 2016, down from third in 2015.

However, Yingli Green continued to invest in its Project PANDA, a research and development project for next-generation high efficiency monocrystalline PV cells, established back in June 2009. The company noted that by the end of 2016, it had achieved an average cell conversion efficiency rate of 20.8% on the PANDA (N-type mono PERT) commercial production lines.

Further development is on-going to improve N-PERT cell performance with doping, passivation and metallization enhancements. Yingli’s roadmap is aiming for 22% efficiency of N-PERT cell for production.

The company also had its PANDA bifacial module receive China’s ‘Front Runner certification at the end of 2016 and is the leading supplier of the technology to date and is aiming to develop a bifacial cell with bifaciality greater that 95%.

Canadian Solar

Canadian Solar has continued to place greater emphasis on module efficiency improvements, focused on P-type multicrystalline technology and has been a perennial low spender on R&D.

The company allocated US$17.4 million to R&D activities in 2016, up slightly from US$17.05 million in 2015. As a result the company just about traded places with estimated spending from REC Solar to be ranked eleventh, compared to twelfth in 2015.

Canadian Solar began commercializing its in-house developed black silicon technology, Onyx technology, on multicrystalline wafers to be used with PERC technology, which entered mass production in March 2016.

Indeed, Canadian Solar is placing a potentially risky bet on pushing ahead with this technology combination after stating at the PV CellTech conference in early 2017 that it would continue to focus on this technology in R&D. However, the company also has small-scale initiatives on N-type bifacial and heterojunction cell development.

REC Group

We have estimated that the REC Group continued to tweak R&D expenditures slightly down from US$17.4 million from figures provided by the company that year to around US$16 million in 2016.

This meant it traded places with Canadian Solar, almost six times larger, from a module manufacturing capacity standpoint to be ranked twelfth in the R&D spending rankings in 2016.

The company was sold to Bluestar in late 2014 and delisted from the Norwegian Stock Exchange in 2016.

With the adoption of PERC cell technology and an ongoing transition to 100% P-type multicrystalline PERC production with half-cut cells, R&D intensity into PERC was expected to slowdown and therefore R&D expenditure lowered in 2016.

However, spending on PERC efficiency and production cost reductions was expected to account for a key percentage of R&D expenditure in 2016 and beyond. The company had focused on improving light capture of PERC cells and migrate to 5BB technology to reduced cell resistance in 2016.

R&D efforts were expected to continue in the field of diamond wire and black silicon technology ahead of the migration in 2017. Like other previously exclusive multicrystalline manufacturers, development of monocrystalline PERC product offerings would also receive investment in 2016 and beyond.

Cumulative R&D spending rankings and analysis

As previously highlighted in our 2015 report, we expected First Solar to exceed the US$1.0 billion mark in cumulative (since 2007) R&D spending. Indeed, First Solar surpassed that mark in 2016, reaching a cumulative US$1,027.8 million in R&D expenditure, making it the first module manufacturer to do so.

First Solar has no equal in the PV industry for investment in R&D activities over the last 10 years.

12 Key PV Module Manufacturers Cumulative R&D Spending (US$ Millions) 2007-2016.12 Key PV Module Manufacturers Cumulative R&D Spending (US$ Millions) 2007-2016.

Second in the cumulative R&D spending rankings is SunPower, which was expected to surpass the US$500 million market in 2016. Through much of the period, SunPower has been ranked second or third in annual spending and with its increased spend in 2016, easily surpassed that figure reaching a total spend of US$583.2 million over the last 10 years.

SunPower is only the second company to surpass cumulative R&D spending of over US$500 million, a figure not expected to be reached by another company over the next four years or more.

Due to its previous high R&D expenditure and PV market leadership position, Yingli Green is the third ranked for cumulative R&D spending. The company reached cumulative R&D spending over the last 10 years of US$356.7 million.

In fourth place is ReneSola, having cumulative R&D spending over the last 10 years of US$322.8 million. Since 2010, ReneSola had been a consistently high investor in R&D activities, which only in 2016 experienced a significant decline, due to its business transition. R&D spending peaked in 2014 at US$52.6 million.

SolarWorld was ranked fifth with cumulative R&D spending over the last 10 years of US$269.4 million. The company had spent no less than US$25 million per annum from 2010 onwards and peaked spending just short of US$50 million in 2012.

In the middle of the field, REC Solar, Trina Solar and Suntech had cumulative R&D spending of US$225.5 million, US$218.8 million and US$215.9 million, respectively over the 10 year period.

Three companies, Hanwha Q CELLS, JA Solar and Canadian Solar had cumulative R&D spending of US$171.4 million, US$132.4 million and US$103.6 million, respectively, highlighting spending over the 10 year period was below the US$200 million market but above the US$100 million level.

The only company that had cumulative R&D spending below US$100 million was JinkoSolar, which achieved a total spend of US$98.3 million between 2007 and 2016.

What does 10 years of R&D spending tell us?

On the surface, the most telling aspect of tracking R&D spending for a decade is the lack of correlation to market leadership, notable by JinkoSolar’s current leadership position and that of Trina Solar, preceding 2016 for two years.

Perennial laggard Canadian Solar has also supported that thesis having climbed the rankings tables (of annual module shipments) in recent years to become the third largest producer.

At the other end of the scale, First Solar and SunPower have dominated R&D spending levels in this period and yet only First Solar topped the rankings table for a short period. Although retaining a top 10 position for many years, it has been surpassed by companies with a need to spend a fraction in R&D to be leaders.

Worse is the position of SunPower through the last 10 years, having lost market share and ranking positions almost throughout the period without fail.

Interestingly, both SunPower and First Solar have proprietary technologies that require custom production equipment yet both are in major manufacturing transitions. It would be highly unlikely either company could come out the other side stronger without the history of investment in R&D.

Time will tell if that theory holds true but it is reasonable to assume that a major technology transition by the likes of JinkoSolar or Canadian Solar would not make the companies stronger given the lack of investment.

Indeed, JinkoSolar has probably seen the writing on the wall and started a major boost in R&D spending a few years ago. This has been led by p-type mono PERC expansions and less reliance on P-type multi technologies. In contrast, Canadian Solar is sticking with P-type multi technologies, so time will tell if that strategy works.

It should also be noted that until 2015 there had not been a major technology buy cycle with a significant migration to PERC technology and the adoption of IBC and HJ technology outside historical incumbents SunPower and Panasonic, respectively.

What we are alluding to is that 10 years of R&D spending behaviour has not forward projected market leadership, unlike what has been seen in the semiconductor industry. That said, 10 years of R&D spending behaviour in the solar industry may take longer to work its way through. Clearly, that theory rests with the likes of First Solar and SunPower over the next few years.

End of an era

Reflected throughout the 2016 report has been the increased reliance on estimated figures. When the analysis originally began, all 12 manufacturers were publically listed companies and therefore official and verifiable figures were available.

There had been moments when estimates had to be made, such as when Suntech was bankrupt but was soon back in action in another publically listed company, enabling continued reporting. Problems occurred when REC split into two companies but these two companies remained public.

However, a few years later, REC’s module manufacturing arm was acquired by a private Chinese enterprise and has since stopped providing the necessary figures for this report. Trina Solar, the second largest PV manufacturer in 2016 went private before having to release official figures for 2016, adding to the need to use estimates.

The issues continued to mount in 2017, when SolarWorld entered insolvency proceedings and, although back in business, it is no longer publically listed and estimates would have to be used for the next report. The same could happen with ReneSola, with its manufacturing operations potentially spun-off into private hands. JA Solar and JinkoSolar could follow Trina Solar in delisting and going private as well.

Already four of the twelve manufacturers have gone private and the study has become significantly less representative of the sector than in the past. The greater dependency on estimated figures would also further undermine the value of the report and its analysis in the future.

We should all be aware of how dynamic and sometimes brutal the PV manufacturing industry can be and this report has clearly plotted some of those events over the years, not least the first major industry downturn.

However, we have been closely watching the rise of other manufacturers in the last few years, notably LONGi Solar, GCL-SI and more recently Jolywood, all publically listed in China with the possible inclusion in a new collection of companies with those still relevant from our original group since 2007.

With the uncertainties surrounding how many companies will still be relevant to continue with from the original group and how best to integrate much newer companies, means that it is definitely an end of era with this report, but a decision on continuing, although with new additions, will be made at a later date.

Source: PV-Tech

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US trade body recommendation may impact India’s solar power sector

Indian solar power tariffs’ sharp decline will get arrested in the short term with Chinese solar module prices set to increase post the US trade body recommendation on Friday

India’s record low tariff was Rs2.44 per kilowatt hour (kWh) in May.

New Delhi: Indian solar power tariffs’ sharp decline will get arrested in the short term with Chinese solar module prices set to increase post the US International Trade Commission’ (USITC) recommendation on Friday.

With the USITC in an unanimous vote concluding that cheap imports are hurting US manufacturers, US developers will ramp up their pace of placing advance orders to shore up cell and module supplies. This stockpiling to meet next year’s demand will lead to a price increase of Chinese modules and their limited availability for Indian developers, thereby also putting at risk projects that won licences betting on a continued decline in module prices.

To be sure, once the commission submit its report to the US President Donald Trump by 13 November post a 3 October public hearing, the final decision will be taken by Trump himself, whose presidential campaign and term has been built around growing American manufacturing.

“The US International Trade Commission (USITC) today determined that increased imports of crystalline silicon photovoltaic cells (whether or not partially or fully assembled into other products) are being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing an article like or directly competitive with the imported article,” the US agency said in a statement.

“The President, not the Commission, will make the final decision concerning whether to provide relief to the US industry and the kind of relief to provide, including with respect to imports from FTA (free trade agreement) countries,” the statement added.

If the US President does decide to impose protectionist measures in the backdrop of US’s withdrawal from the Paris climate agreement, then the solar equipment prices will fall. This will help India’s plan to add 100 gigawatt (GW) of solar power capacity by 2022.

Modules account for nearly 60% of a solar power project’s total cost. Of China’s solar module manufacturing capacity, estimated to be around 70GW per year, the major markets are the US, India and China itself.

Interestingly, India is also conducting an anti-dumping investigation on solar equipment from China, Taiwan and Malaysia.

Any price fluctuation in Chinese equipment cost has a significant impact on the Indian clean energy space given that most developers here have been sourcing modules from countries such as China, where they are cheaper. According to consulting firm Bridge to India, the Indian solar module market is dominated by Trina Solar (25.7% market share), Hanwha (10.5%) and Risen (7.6%), with domestic manufacturers’ accounting for only 10.6% market share.

Experts say the US agency’s recommendations have been on expected lines.

“(It is) still not a clear case for duties because technically the USITC recommendation could be different to save jobs and the downstream industry. Nonetheless, in short-term, module demand and prices will shoot up, which will hurt Indian project pipeline. If the duty is imposed, prices are likely to fall significantly next year,” said Vinay Rustagi, managing director at Bridge to India.

The early tremors of the landmark petition have already been felt in India, which is the world’s third-largest energy consumer after the US and China. Mintreported on 24 August about Chinese module manufacturers reneging on their contracts and demanding an upward price revision to supply the equipment already contracted for.

Major Chinese solar module manufacturers include Jinko Solar, JA Solar Holdings, ET Solar, Hanwha Group, Chint Solar, GCL-Poly Energy Holdings Ltd and Trina Solar Ltd.

Module prices have also firmed up with China extending the feed-in tariff regime, which ensures a fixed price for power producers, for the third quarter.

India’s record low tariff was Rs2.44 per kilowatt hour (kWh) in May. Tariffs since then have firmed up with the auction conducted in Gujarat this week witnessing the lowest winning bid of Rs2.65 per kWh.

In such a scenario, Indian developers don’t have much of a choice apart from awaiting the final US play and trying to read the tea leaves.

Source: LiveMint

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Low Indian solar tariffs begin to backfire

Consistent naysayers have predicted that the strategy of presuming module prices would continue to fall would backfire. Credit: Renew Power

After two years of tumbling solar tariffs hitting the headlines, the Indian industry is feeling the consequences of its risk-taking for the first time, with a series of reversing market conditions and contract renegotiations sparking serious concern.

Following multiple local reports, an executive from a prominent Indian PV developer confirmed to PV Tech, under condition of anonymity, that almost all major Chinese module suppliers have been backing out or reneging on module supply contracts in India, with Trina Solar as the only exception.

A number of factors have led to this situation, including the ravenous appetite that China has for downstream deployment this year, and a lack of polysilicon supply. China’s installations – well above targets – have raised the price of solar equipment for all other markets relying on Chinese supply. India happens to be hugely reliant on Chinese module imports.

Ever since tariffs started tumbling, there have been consistent naysayers predicting that the strategy of presuming module prices would continue to fall would backfire. Consultancy firm Bridge to India, in its latest market insight, said that Indian firms have tended to factor in a 15-20% annual cost reduction or even higher when bidding for projects, so the recent price increases have come as “a shock to the sector”. Indeed expectations of US$0.28/Wp prices this quarter are being quoted at about US$0.34/Wp, said the consultancy – not to mention the 5% addition of the Goods and Services Tax (GST).

Bridge to India added that up to 1GW of projects due to be completed this year could face delays – before even considering the looming threat of anti-dumping duties. An investigation into Chinese, Taiwanese and Malaysian imports is currently under way with the possibility of a provisional anti-dumping duty as early as September 2017. However, the consultancy noted that an oversupply situation for multi-crystalline modules could return for India since the driving force of China’s next additions – the Top Runner programme – will focus on high efficiency mono modules.

Separate Discom threat

In an altogether different issue, Global analysis firm Crisil Research has also noted that the aggressive low bids have caused a “recoiling” in the industry at large, as the country’s distribution companies (discoms) call for renegotiation of power purchase agreements (PPAs) they have signed at higher tariffs.

With this in mind, Bridge to India’s analysis that Indian developers are “caught between a rock and a hard place” seems apt.

Discoms – even some of the financially strongest – have openly noted reservations about honouring letters of Intent for PPAs for as much as 3GW of projects, said Crisil, including Andhra Pradesh (~1.1GW), Gujarat (~250MW), Karnataka (~900MW) and Tamil Nadu (500MW).

Analysing the difference between PPA tariffs and average power purchase cost (APPC) in a state, Prasad Koparkar, senior director, Crisil Research, said: “In all, around 7GW of solar projects tendered or awarded at tariffs of INR5-8/unit over fiscal 2015-2017 could be at risk. PPAs or letters of intent for these capacities, in Uttar Pradesh, Andhra Pradesh, Karnataka, Telangana and Punjab, were inked at tariffs 12-66% higher than the APPC of these states.”

Including solar and wind energy, Crisil Research believes investments worth INR480 billion (US$7.5 bilion) are currently at risk. It also listed a number of potential knock-on effects including multiple court cases and banks becoming more cautious about lending to renewable energy projects.

Crisil did however note a “glimmer of hope” given their analysis of standard PPAs in major states indicating that contract termination is not legally allowed if there is no delay in project commissioning.

Source: PV Tech

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India issues new specifications for solar power modules

The new standard specifications will come into force on the expiry of one year from the date of their publication in the Official Gazette, 30 August 2017

India issues new specifications for solar power modulesNew Delhi: India’s Ministry of New and Renewable Energy (MNRE) has issued an order for new set of standard specifications for solar Photo-Voltaic (PV) modules which will come into force after one year from the date of their notification on Wednesday.

”This Order may be called the Solar Photovoltaics, Systems, Devices and Components Goods (Requirements for Compulsory Registration) Order, 2017. It shall come into force on the expiry of one year from the date of its publication in the Official Gazette,” the ministry’s notification said.

As per the order, under the Bureau of Indian Standards (BIS) Act of 1986, any manufacturer who manufactures, stores for sale, sells or distributes solar photovoltaics systems, devices or components will make an application to the bureau for obtaining registration for use of the ‘standard mark’ in respect of the Indian standard.

“No person shall by himself, or through any person on his behalf, manufacture or store for sale, import, sell or distribute goods which do not conform to the specified standard and do not bear the standard mark as notified by the bureau,” the notification said. It added that nothing in the order will apply in relation to manufacture of goods meant for export.

The order also said sub-standard or defective goods which do not conform to the specified standards will be deformed beyond use and disposed of as a scrap by the manufacturer or the representative of overseas manufacturer by any agency authorised by the manufacturer as its authorised representative in the India.

It further noted that unclaimed consignment of such goods will be deformed and disposed of as scrap by any department or agency authorised by MNRE. As per the order, sample of the modules of the registered user will be drawn from his manufacturing unit or from the market by the ministry or the authorised person for ascertaining whether they conform to the specified standard.

“The samples shall be drawn at least once in two years for a product or series of products covered under the scope of registration granted,” the notification said, adding that the location and the product to be picked up shall be selected at random.

Source: ET Energy World

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Chinese solar module firms reneging on India contracts – Chinese suppliers are demanding an increase of around 6 cents per watt in prices of solar modules already contracted for

Any increase in solar module prices will impact the internal rate of return (IRR) from such solar power projects, many of which have already signed power purchase agreements (PPAs). Photo: Bloomberg

Any increase in solar module prices will impact the internal rate of return (IRR) from such solar power projects, many of which have already signed power purchase agreements (PPAs). Photo: Bloomberg

New Delhi: In what has come as a shock to India’s solar power developers, Chinese module manufacturers are reneging on their contracts and are demanding an upward price revision to supply the equipment already contracted for, said several people aware of the development.

Any price increase will impact the internal rate of return (IRR) from such projects, many of which have already signed power purchase agreements (PPAs).

Some Chinese suppliers have sought an increase of around 6 cents per watt in module prices in a market which they dominate. Module prices are currently around 37 cents per watt. Modules account for nearly 60% of a solar power project’s total cost.

“Many Chinese manufacturers are going back on their contracts. They are completely reneging on the contracts signed with Indian developers,” said Hero Future Energies chief executive officer (CEO) Sunil Jain.

“We did a contract in June for a delivery in August. The Chinese have come for renegotiation seeking a price increase. The Chinese manufacturers are aware that we have a firm deadline and that the failure to meet it will result in penalties on us, so they have resorted to this strategy,” alleged a New Delhi-based CEO of a firm that has been actively participating in India’s solar auctions, asking not to be identified.

Module prices have firmed up with China extending the feed-in tariff regime—which ensures a fixed price for power producers— for the third quarter, and with US developers placing advance orders to shore up cell and module supplies amid demands for a cap in prices of cheap imports into the US.

“The new Chinese offer is either to accept the new prices or cancel the contract. One can’t work like this,” added a top functionary at the second firm who also didn’t want to be named.

Major Chinese solar module manufacturers include Trina Solar Ltd, Jinko Solar, JA Solar Holdings, ET Solar, Chint Solar and GCL-Poly Energy Holdings Ltd.

“Developers have been complaining about Chinese manufacturers increasing their prices. Since the tariffs have already been discovered and the PPAs signed they may have to take a hit on their IRRs,” said a person involved in devising and running India’s solar park bid process.

A Mytrah Energy spokesperson said in an emailed response: “We wouldn’t like to name names due to obvious reasons but it is fair to say that we have witnessed top-tier and very large suppliers as well as smaller suppliers reneging contracts in a fairly casual manner.”

This comes at a time when states are now looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff triggering concerns that it will precipitate a crisis in the Indian green energy space which has been attracting investors in droves.

Queries emailed to Trina Solar, Jinko Solar, JA Solar Holdings, ET Solar, Chint Solar and GCL-Poly Energy remained unanswered. Queries sent to India’s new and renewable energy ministry spokesperson also went unanswered.

Some believe having long-term relationships with quality suppliers holds the key.

“There can be blips in terms of supply and demand. So one must think about one’s procurement strategy with suppliers having long-term goals rather than ones with transactional approach,” said Inderpreet Wadhwa, founder and CEO of Azure Power.

Source: LiveMint

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Power Sector at a Glance – ALL INDIA – August 2017

Power Sector at a Glance ALL INDIA

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As on 16-08-2017
Source: OM SECTION

1.Total Installed Capacity  (As on 31.07.2017) – Source : Central Electricity Authority (CEA)

Sector

MW

% of Total

State Sector

81,622

24.7%

Central Sector

103,868

31.5%

Private Sector

144,663

43.8%

Total

3,30,154

 

Fuel

MW

% of Total

Total Thermal

2,20,456

66.8%

                                             Coal

1,94,433

58.9%

                                             Gas

25,185

7.6%

                                             Oil

838

0.3%

Hydro (Renewable)

44,614

13.5%

Nuclear

6,780

2.1%

RES* (MNRE)

58,303

17.7%

Total

330,154

* Installed capacity in respect of RES (MNRE) as on 30.06.2017.

RES (Renewable Energy Sources) include Small Hydro Project, Biomass Gasifier, Biomass Power, Urban & Industrial Waste Power, Solar and Wind Energy.

Policy Initiatives / Decision Taken

Electricity Act 2003 has been enacted and came into force from 15.06.2003. The objective is to introduce competition, protect consumer’s interests and provide power for all. The Act provides for National Electricity Policy, Rural Electrification, Open access in transmission, phased open access in distribution, mandatory SERCs, license free generation and distribution, power trading, mandatory metering and stringent penalties for theft of electricity.

It is a comprehensive legislation replacing Electricity Act 1910, Electricity Supply Act 1948 and Electricity Regulatory Commission Act 1998.The Electricity Act, 2003 has been amended on two occasions by the Electricity (Amendment) Act, 2003 and the Electricity (Amendment) Act, 2007. The aim is to push the sector onto a trajectory of sound commercial growth and to enable the States and the Centre to move in harmony and coordination.

Performance of Generation from Conventional Sources

1.0 PERFORMANCE OF CONVENTIONAL GENERATION

1.1 The electricity generation target of conventional sources for the year 2017-18 has been fixed as 1229.400 Billion Unit (BU). i.e. growth of around 5.97% over actual conventional generation of 1160.141 BU for the previous year (2016-17). The conventional generation during 2016-17 was 1160.141 BU as compared to 1107.822 BU generated during 2015-16, representing a growth of about 4.72 %.

1.2 Generation and growth in conventional generation in the country during 2009-10 to 2017-18 :- 

Year Energy Generation from
Conventional Sources
(BU)
% of growth
2009-10 771.551 6.6
2010-11 811.143 5.56
2011-12 876.887 8.11
2012-13 912.056 4.01
2013-14 967.150 6.04
2014-15 1048.673 8.43
2015-16 1107.822 5.64
2016-17 1160.141 4.72
2017-18* 405.891 3.76

* Upto July 2017 (Provisional), Source : CEA

1.3    The electricity generation target of conventional sources for the year 2017-18 was fixed at 1229.400 BU comprising of 1042.028 BU thermal; 141.400 BU hydro; 40.972 nuclear; and 5.000 BU import from Bhutan.

2.0 Plant Load Factor (PLF):

2.1 The PLF in the country (Coal & Lignite based) from 2009-10 to 2017-18 is as under:

Year PLF Sector-wise PLF (%)
% Central State Private
2009-10 77.5 85.5 70.9 83.9
2010-11 75.1 85.1 66.7 80.7
2011-12 73.3 82.1 68.0 69.5
2012-13 69.9 79.2 65.6 64.1
2013-14 65.60 76.10 59.10 62.10
2014-15 64.46 73.96 59.83 60.58
2015-16 62.29 72.52 55.41 60.49
2016-17 59.88 71.98 54.35 55.73
2017-18* 60.43 72.40 55.20 56.27

* Upto July 2017 (Provisional), Source : CEA

3.0 Power Supply Position

The power supply position in the country during 2009-10 to 2017-18 :

Energy Peak
Year Requirement Availability Surplus(+)/Deficts(-) Peak Demand Peak Met Surplus(+) / Deficts(-)
(MU) (MU) (MU) (%) (MW) (MW) (MW) (%)
2009-10 8,30,594 7,46,644 -83,950 -10.1 1,19,166 1,04,009 -15,157 -12.7
2010-11 8,61,591 7,88,355 -73,236 -8.5 1,22,287 1,10,256 -12,031 -9.8
2011-12 9,37,199 8,57,886 -79,313 -8.5 1,30,006 1,16,191 -13,815 -10.6
2012-13 9,95,557 9,08,652 -86,905 -8.7 1,35,453 1,23,294 -12,159 -9.0
2013-14 10,02,257 9,59,829 -42,428 -4.2 1,35,918 1,29,815 -6,103 -4.5
2014-15 10,68,923 10,30,785 -38,138 -3.6 1,48,166 1,41,160 -7,006 -4.7
2015-16 11,14,408 10,90,850 -23,558 -2.1 1,53,366 1,48,463 -4,903 -3.2
2016-17 11,42,929 11,35,334 -7,595 -0.7 1,59,542 1,56,934 -2,608 -1.6
2017-18* 4,12,058 4,09,480 -2,578 -0.6 1,59,816 1,58,393 -1,423 -0.9

* Upto July 2017 (Provisional), Source : CEA

 

Generation (Billion Units)

Generation Growth (%)

   

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India Energy Statistics 2017

India_Energy_Statistics_2017

FOREWORD

Energy being a strategic commodity plays a significant role in economic development of a country. Energy systems in India have evolved over last six decades along with country’s economic development, supporting the aspiration of 1.2 billion people, within the framework of democratic polity, globally integrated economy and environmentally sensitive regime. Ever increasing demand of energy has posed tremendous pressure on its limited resources and has necessitated optimum use of its resources. India pursued a reformed development agenda since 1991. Significant effort has gone into improving energy availability, as support to country’s development initiatives.

For proper planning, statistics plays a vital role. This publication, 24th in the series is an annual publication of CSO and is a continued effort to provide a comprehensive picture of Energy Sector in India. Energy Statistics is an integrated and updated database of reserves, installed capacity, production, consumption, import, export and whole sale prices of different sources viz. coal, crude petroleum, natural gas and electricity. Energy Balance and Sankey Diagram (Energy flow diagram) further aims to enhance its utility. Some of the data may not match with the previous issues owing to definition or data revision by source ministries.

This is for the first time that theme wise energy indicators are being brought out by CSO as part of Energy Statistics for the use of policy makers as well as for comprehensive reporting. Indicators play a vital role by turning data into information for policy makers and help in decision-making. They also simplify a complex and large information base, thus providing a “synthesis” view of prevailing situation.

Identification of list of indicators depends on various factors as transparency, scientific validity, robustness, sensitivity and the extent to which they are linkable to each other. However no single factor can decide all indicators and all situations since each indicator needs different data sets. The indicators are selected on the guidelines/approach followed by IAEA in their publication “Energy Indicators for Sustainable Development: Guidelines and Methodologies”, which was brought out in corporation with United Nations Department of Economic and Social Affairs (UNDESA), International Energy Agency (IEA), Eurostat and European Environmental Agency (EEA).

The data in the publication has been sourced from the subject Ministries of the Government of India. The co-operation and support provided by these Ministries/Departments in compiling this publication is appreciated. I also appreciate the efforts of the officers of Economic Statistics Division, Central Statistics Office in bringing out this publication in a time bound manner. I hope the publication will prove to be useful to the policy makers, planners and researchers working in field of Energy. It shall be CSO’s endeavour to continuously improve the publication both in content and design with the help of user feedback and data source agencies.

ENERGY INDICATORS (2015-16) AT A GLANCE

 

 

Theme Sub-theme Indicator Category                       Unit                     Value
 

Use and Production Pattern

Overall Use  

Energy use per capita

TPES toe/person 0.53
TFC toe/person 0.41
Electricity Kwh/person 777.02
Overall Productivity Energy use per unit of GDP TPES toe/000’rupees 0.006
TFC toe/000’rupees 0.005
Electricity Kwh/rupees 9.55
Supply Efficiency Efficiency of energy conversion and distribution  

All

 

%

 

20.63

 

 

Production

Reserves-to-production ratio All years 172
coal years 216.03
lignite years 140.97
 

Resources-to- production ratio

All years 402
Crude oil years 16.81
Natural Gas years 38.05
Coal years 483
Lignite years 1017
 

 

 

End Use

 

Sectoral Energy Intensities

Industry toe/000’rupees 0.013
Agriculture toe/000’rupees 0.001
Transport toe/000’rupees 0.02
 

Sectoral Electricity Intensities

Industry Kwh/000’rupees 19.17
Agriculture Kwh/000’rupees 10.66
Transport Kwh/000’rupees 3.23
Diversification  

Fuel shares in TPES

Crude Oil % 26.44
(Fuel Mix) Natural Gas % 4.77
Coal % 66.05
RE &Others % 2.74
 

Fuel share in TFC

Oil Products % 37.06
Natural Gas % 5.01
Coal % 41.08
Electricity % 16.85
 

Fuel share in electricity

Thermal % 74.11
Nuclear % 2.81
Hydro % 10.07
Non-Utility % 12.62
 

 

 

Security

 

 

Imports

 

Net energy import dependency

Overall % 38.64
Crude Oil % 84.59
Natural gas % 33.95
Coal % 35.52
Electricity % 0.47
Strategic Fuel Stocks Stocks of critical fuels per corresponding fuel consumption  

Coal

 

%

 

7.78

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